There have been many articles about something called unclaimed property. What is it and could this be property that your company possesses?
Unclaimed property or abandoned property is not a tax but an outstanding liability that a company owes to an entity or an individual for a specified period of time determined by state law. Companies are required by law to send funds from lost accounts to the state of the owner’s last known address.
Common forms of unclaimed property include customer overpayments, uncashed vendor payments, uncashed dividend or payroll checks, refunds, savings or checking accounts, unredeemed money orders, insurance payments or refunds, life insurance policies, annuities, utility security deposits and many more.
State treasurers and other officials in charge of the state’s unclaimed property committees are using websites and cross-referencing public databases to locate companies that have not reported unclaimed property. A majority of companies have some amount of unclaimed property in their accounts, which has caused many states to become increasingly aggressive in auditing companies that have been found to have not report unclaimed property.
So what should your company do to ensure that it is reporting any unclaimed property?
1. Review your checking accounts for uncleared transactions that are six months or older.
2. Contact the entity or individual about the uncleared transaction.
3. If you are not able to make contact with the owner, then contact your accountant for guidance on each state’s laws for reporting unclaimed property.
Also, don’t forget to contact your accountant first if you ever receive a letter from a state department of revenue regarding an unclaimed property audit.
Written by: Alacia Wilson, Senior Accountant